Workers’ comp task force idled

Washington Gov. Gary Locke will decide within the next week or so whether he wants to save a foundering task force on workers’ compensation reform. It will take quite a rescue effort.

Locke created a Business and Labor Workers’ Comp Group last fall, when state employers faced a double-digit increase in premiums for the second year in a row. A stock market downturn that had reduced investment returns was squeezing the system on one end, while court rulings that had altered formulas for calculating earnings, thus increasing benefits, pushed from the other end. There have been few significant changes in workers’ comp since the first term of Gov. Booth Gardner in the mid-1980s. Reform is one of the top priorities of Locke’s Competitiveness Council.

Everything was supposed to be on the table. And Locke was serious enough about the effort to put his chief of staff, Tom Fitzsimmons, in charge. Yet, after little more than one month, the task force has become a task fizzle. Members could not even agree on an agenda.

Labor interests wanted workplace safety included. Their reasoning: What better way to reduce costs than by reducing accidents?

Although the Association of Washington Business, the umbrella organization for state employers, was amenable, the Washington Farm Bureau and Building Industry Association of Washington were not. Unable to bring those critical constituencies along, AWB President Don Brunell two weeks ago informed the governor that business would no longer participate in the discussions.

“It’s been so doggone contentious for so long,” Brunell says. “We were never really able to agree on the scope of the issues.”

He says business also had doubts the task force could complete its work by Oct. 15, Locke’s deadline, or that whatever agreement was reached would get the blessing of a new governor and Legislature. Some of the other groups with a stake in the outcome, attorneys and therapists among them, will have plenty to say when its recommendations came out.

“Somebody’s ox is going to get gored,” Brunell says. “It’s not going to be a pretty process.”

He adds that agreement on even a few issues might be enough to dampen whatever premium increases for 2005 the Department of Labor and Industries recommends when the rate-setting process concludes at the end of the summer.

The inability of the Legislature and governor’s office to deal with workers’ comp problems has punted the issue to Washington’s courts, where recent rulings have pushed costs higher, Brunell says.

Labor, while open to reform, says the Washington workers’ comp system remains among the least costly in the United States despite premium increases totaling almost 40 percent the last two years. Rates had been steady or lower the previous eight years. Labor Council spokesman David Grove dismissed business assertions that workplace safety issues have no place in workers’ comp discussions.

“The state, as an insurer, has an obligation to require a certain level of workplace safety,” he says.

Groves notes a Farm Bureau lawsuit challenging the state’s right to inspect private workplaces without permission was dismissed in U.S. District Court in Spokane last week after the state agreed it would seek an administrative warrant if permission was denied. Labor had no objection to that condition, he says.

Fitzsimmons says he and Locke have not sorted out the latest developments. Until L&I fixes the 2005 rates at the end of the year, he says, the chance for some agreement remains.

With Locke’s second term expiring at year-end, Fitzsimmons says he “would love to leave office knowing he left the workers’ compensation system in better shape than he found it.”

How bad the Washington system is depends on whom you ask. Labor likes to reference semi-annual reports from Oregon that say rates remain among the lowest of the 50 states, and the benefits among the best. The AWB questions that math and the assumptions behind it.

Fitzsimmons says the task force would make a good system better.

But even a reconstituted task force will not have the last say. The BIAW says it will submit an initiative to the 2005 Legislature containing a long list of proposed changes to the system, among them a limit on attorneys’ fees and a rollback of the definition of wages that will exclude the cost of benefits.

Groves says labor will respond with its own initiative if the builders go ahead with their plan.

Either, or both, could end up on the ballot in 2005.

Meanwhile, California finally passed significant reforms of its system, which charged premiums dwarfing those levied in Washington. Rates there may not drop to anything like those in Washington, but changes will likely give pause to companies being pushed out of state by high premiums there.

Brunell says Locke should have made workers’ comp a priority long ago, not at the end of his term. Without the pressures imposed by the state Supreme Court and Wall Street, however, the impetus just was not there. It is now.